Universal Health Services (UHS) Baird 2024 Global Healthcare Conference summary

Guidance and supplemental payments

• 2024 adjusted EBITDA guidance was raised by $250 million, reflecting approved Medicaid supplemental programs, but excludes pending Tennessee and DC programs, which could provide further upside if approved.

• Pending Tennessee and DC Medicaid programs could add $42–56 million and $80–90 million, respectively, retroactive to mid and late 2024 upon approval.

• Guidance remains conservative, not assuming first-half outperformance will persist in the second half, and maintains original assumptions for acute volumes and behavioral pricing.

• Cost improvements are considered sustainable and are factored into the guidance.

Acute care margin recovery

• Acute care margins have rebounded from 10% post-pandemic to over 14%, with a path back to pre-COVID levels (16%) expected within 2–3 years.

• Recovery is driven by normalization of demand, improved labor market conditions, and a return to pre-pandemic cost management practices.

• Geographic recovery varies, with slower improvement in Nevada, California, and DC compared to Texas and Florida.

• Acute care volumes have been above historical norms for 18 months, but some moderation is expected.

• Cost management efforts focus on productivity, length of stay reduction, and technology to drive efficiency.

Behavioral health margin outlook

• Behavioral health margins are expected to return to pre-COVID levels within 18–36 months, with high-20s margins from 2013–2014 seen as an aspirational long-term goal.

• Labor shortages have muted behavioral volumes, but incremental progress is expected as hiring improves and Medicaid redeterminations subside.

• Medicaid supplemental payments have provided a disproportionate benefit to behavioral margins.

• Strong behavioral pricing is driven by capacity constraints and increased leverage over payers, with more contract terminations to secure fair rates.

• Improved payer mix and targeted recruitment strategies are supporting volume and margin recovery.